The Federation of Hotel and Restaurant Associations of India (FHRAI) has made written representations to Minister of Finance Nirmala Sitharaman, Minister of State for Finance Anurag Singh Thakur and to Governor of Reserve Bank of India (RBI) Shaktikanta Das, requesting for an extension of moratorium for additional three months.
The hotel industry has made no progress in terms of bookings even after several states unlocked and where hotels resumed operations. The industry has registered average occupancy levels at 10 to 20 per cent. With rental and salary bills, statutory payments and other establishment costs, hotels are finding it unviable and difficult to carry on running the businesses. FHRAI has informed the ministry that an extension of moratorium at this time could help hotels restructure existing loans since the process of restructuring is time consuming.
Gurbaxish Singh Kohli, VP, FHRAI and president, Hotel and Restaurant Association of Western India (HRAWI), said, “The industry is going through its toughest time. For more than four months, hotels and restaurants have remained shut and have earned no revenue throughout the lockdown. There is no improvement in forward bookings and wherever hotels and restaurants have opened, the footfalls are negligible.”
“In addition to the monthly outgoings and the statutory levies, we now have to spend more on employing hygiene and safety measures to follow the SOPs and guidelines issued by the Central and state governments. On account of all this, the debt restructuring plan announced by the RBI for the stressed MSMEs is not going to help the hospitality sector, therefore we have urged that the moratorium be extended by a further three months,” he added.
The Indian hospitality industry has continued to report zero revenues since the lockdown came into effect back in March 2020. Even post-unlock, in the states where hotels have resumed operations, there is very little movement.
Pradeep Shetty, joint honourable secretary, FHRAI, and VP, HRAWI, said, “Many of our members including both hotels and restaurants are at a stage of bankruptcy and quite a few have already filed for it. 90 per cent of the hospitality sector will not be able to avail the debt restructuring plan due to insufficient time at their disposal and other varied reasons. These eventually will be declared NPAs post-August 31, 2020.”
“The debt restructuring plan will provide a window for the banks to undertake coercive action against the borrowers whose repayments are pending. With this and the future of the hospitality sector in mind, we urge the government to consider the extension of moratorium for another three months. This might just save the Indian hospitality industry from an imminent collapse,” he concluded.